Marginalisation of LDCs and Small Vulnerable States in World Trade: Economic Paper 71 »

Roman Grynberg is the Deputy Director of the Economic Affairs Division, Commonwealth Secretariat, London.

Mohammad A. Razzaque is Senior Lecturer in Economics at the University of Dhaka, Bangladesh. He has written extensively on trade policy issues.

Bijit Bora is counsellor in the Research Department of the World Trade Organization and was previously in the Research Department of the UN Conference on Trade and Development (UNICTAD).

There are indisputable concerns over the ineffective participation of Least-Developed Countries (LDCs) and Small Vulnerable Economies (SVEs) in the process of global integration, and their failure to derive benefits from the ongoing process of trade liberalization and globalization.

This paper explains the theme of “marginalization” of LDCs and SVEs in the international trade arena, and their declining relative importance in world trade. Statistical analysis is used to determine the long-term declining share of LDCs and SVEs in world merchandise exports. The study argues that the process of marginalization of these countries is mostly the result of the failure of LDCs and SVEs to diversify from their static comparative advantage related to the production of primary products, the significance of which in world trade has declined considerably during the past decades. The analysis emphasises the need for diversification of exports and an expansion of the manufacturing export base in these countries.

Executive Summary
1 Introduction
2 LDCs and Small States in World Trade: Volume, Growth Rate and Share
3 The Performance of Individual Countries
4 Marginalisation in Merchandise Export Trade: A Statistical Analysis
5 Implications for Long-Term Trade and Development Appendices